NZD / USD falls to new daily lows and approaches the 0.7200 level

• The NZD / USD moves lower on Wednesday and returns the gains of the previous day to multi-day highs.
• A softer risk sentiment is considered a key factor putting pressure on the higher perceived risk NZD.
• The decline remains limited amid the sustained selling of the USD and ahead of the minutes of the FOMC meeting.

The pair NZD / USD moves with a negative bias during the European session on Wednesday, falling to new daily lows just below the 0.7210 level.

The pair has seen some selling during the first half of trading action on Wednesday and has returned strong gains from the previous day to four-day highs. A weaker tone in the stock markets has turned out to be a key factor that has put some pressure on the perceived riskier NZD. Having said that, the sustained selling bias of the US dollar could help limit any deeper losses for the NZD / USD pair.

Given the Fed’s stubbornly pessimistic view that any increase in inflation will be transitoryInvestors have been lowering their expectations of a monetary policy tightening earlier than expected. This, coupled with disappointing US housing market data on Tuesday, has acted as a headwind for the dollar. In fact, the DXY dollar index fell below the round level of 90.00, the lowest level since January.

Apart from this, investors can also refrain from opening aggressive positions and may prefer to wait on the sidelines before the release of the FOMC meeting minutes, which will be released later during the American session. This makes it prudent to wait for a strong continuation sell before confirming that the recent positive move seen over the past week has been exhausted.

Ahead of the key event, broader market risk sentiment and USD price dynamics will continue to play a key role in the price action of the NZD / USD pair and could lead to some trading opportunities.

NZD / USD technical levels